MIMI KAR KEE WONG HUNT v. SEVERN VILLA LTD AND OTHERS

HCMP 243/2011
HCMP 522/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 243 OF 2011

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 522 OF 2011

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(Consolidated by the Order of Deputy High Court Judge Carlson dated 7 June 2011)

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R U L I N G

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Introduction

1. Given the previous sharply and bitterly contested interlocutory encounters between the plaintiff and the four defendants in this action it is right to say that wholly unexpectedly the plaintiff, to use her leading counsel’s expression, decided to capitulate on the third day of what had been listed as a 26-day trial.  She agreed to have her claims dismissed and to have Judgment enter against her in favour of the 3 corporate defendants. She also agreed to submit to orders for costs, including costs previously reserved, to be taxed on an indemnity basis.  Therefore, she will shortly have to vacate the property on Severn Road which has been the subject matter of this dispute.

2. This then leaves over two important issues as between herself and her former husband, Mr Raymond Hung who is the 3^rd defendant, upon which I must now rule.  Firstly, the 3^rd defendant’s costs in these proceedings and secondly, the contribution proceedings started by the plaintiff against him which are dated 3October 2011 [C/12/177].  The plaintiff has put in a statement of claim dated 12 October 2011 [C/13/185] in the contribution proceedings to which the 3^rd defendant has failed a defence on 19 October 2011 [C/14/189].

The plaintiff’s stance

3. In describing the events that have taken place since the matter had been originally listed for trial before me in October 2011, which I adjourned for a variety reasons which appear in my written ruling at the time and which I do not purpose to repeat here, I should make clear that the plaintiff has changed her solicitors and counsel as recently as April this year. It is perfectly clear she has now taken the advice of Mr Grossman SC, who has come in to lead for her a matter days before the start of the trial on 2 May, that she has no case against the three corporate defendants which is the basis of her unconditional surrender against these defendants.

4. In the light of this unexpected turn of events, Mr Benjamin Yu SC, for the 3^rd defendant, submits that it must inexorably follow that she must suffer an identical fate against his client.  Her case is lost and she must recognise this by having her contribution proceedings against his client dismissed and pay his costs, also on an indemnity basis.  Why he says so I will need to explain in a little detail presently.

5. Mr Grossman has submitted that these issues should go over and be decided after the hearing of the wife’s ancillary relief application starting on 27 June and which is due to be heard over a number of weeks thereafter.

6. What Mr Grossman’s submission comes to is that the matter between the plaintiff and the 3^rd defendant, as former spouses, is not as clear‑cut at this stage as would require me into rule now on her contribution notice and on Mr Yu’s costs application.

7. Mr Grossman says “let’s wait and see” what happens in the ancillary relief proceedings.  It is not only the outcome of those proceedings which are likely to have a bearing of Mr Yu’s costs and dismissal application but also the evidence to be heard in the ancillary relief application will have a bearing and influence my decision on these applications. The background to these disastrous proceedings, in which she has spent many millions of dollars in legal costs, as have the three corporate defendants who will now recover these from her, is the marital relationship between the plaintiff and the third defendant, or perhaps more accurately described as the marital and commercial relationship between them.  This has been a long marriage but also a long and once, very successful commercial and business relationship.

8. And so, the basis of Mr Grossman’s plea is that I cannot fairly adjudicate on this until I have heard out the matrimonial application which will cover, in important respects, the ground that would have been covered in these proceedings had the matter been fought to Judgment.

The 3^rd defendant’s position

9. In this regard Mr Yu (Mr Dawes with him) has put in an eleven page submission on which he has addressed me.

10. It is important, I think, to have regard to how and why these proceedings have come about and developed.  HCMP 243/2011 was brought by the plaintiff in reaction to a notice served on her by the 1^st and 2^nd defendants determining her licence to occupy the property at Severn Road.  She claimed a beneficial interest in the property and also an irrevocable licence by way of an irrevocable possessory life interest.  Faced with such claims, these two defendants then brought a possession action against her in HCMP 522/2011.

11. As a result, it became an issue in the already extant matrimonial proceedings whether the plaintiff had a beneficial interest in this extremely valuable property which, if she did, the court would be obliged to take into account in its distribution of the matrimonial estate between the plaintiff and the third defendant.

12. It became very plain that the appropriate way forward was to consolidate these proceedings with the ancillary relief application and to hear and determine the property application first.  And that is how the matter has been brought before the court.

13. It also became very clear that the third defendant was a necessary party in these proceedings.  Without his participation a judgment in the plaintiff’s favour would not bind him.

14. The character these proceedings, whilst inevitably having a highly significant impact on the outcome of the matrimonial proceedings between the plaintiff and the third defendant were also discrete in the sense that they would determine the single issue concerning the beneficial ownership of the property at Severn Road.

Conclusion on costs

15. In my judgment it is this discrete aspect concerning the property which overwhelmingly must inform the issue of costs between the plaintiff and the third defendant.  I do not believe that whatever the outcome of the matrimonial application, the plaintiff can now improve her position in respect of costs in this matter against the third defendant.  I can discover no difference between his position and that of the corporate defendants.  He has been forced into having to participate in these proceedings only to have the plaintiff, after massive expenditure of costs by her and by all of the defendants, including the 3^rd defendant, throw in the towel, (to use yet another description of the outcome).  There can now only be one just and correct outcome on costs.  The plaintiff must also pay the third defendant’s costs of defending these proceedings and she must do so on an indemnity basis.

The contribution notice

16. This contribution notice was entirely dependent on the main property proceedings.  These were taken out so to have effect in the event of the plaintiff failing against the corporate defendants.  This being so, they are not to be dismissed without a proper consideration of the issue in the main proceedings and the circumstances of the plaintiff’s comprehensive failure in them.

17. It needs to be recognised that the plaintiff’s right to remain at the property was by virtue of her executive directorship of ADHL. It also has to be recognised that the plaintiff’s removal from her executive directorship was valid and effective.  All of this against the factual matrix that the plaintiff never had a case, as she now accepts, or at least must be taken to accept, that the beneficial interest in the property never lay with her but was always vested in the relevant corporate defendant against whom she has submitted to judgment and, that she will shortly be vacating this property.

18. Where she has failed so comprehensively in the property proceedings it is quite impossible to hold that the third defendant has anything left to answer to the plaintiff as to how she has become answerable to the corporate defendants.  This disastrous application has been of her own making, and in expressing myself in this way I leave open and unanswered the complicated issues of the advice that she had received from her previous solicitors and counsel and how she reacted to that advice.  About such matters I can have no knowledge, but at the end of the day, this has been a massive misadventure.  I can discover nothing, in how matters now stand, to justify my leaving extant this contribution notice to be dealt with after the matrimonial proceedings have been disposed of.

Result

19. This being my view, these proceedings as well must stand dismissed with costs to be taxed on an indemnity basis.